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Cheese in Australia

Dec 2014|Pages: 59

Price: US$990

About this Report

Executive Summary

TRENDS

After half a decade of solid value growth which began in 2008, value growth of cheese turned negative in 2013, falling by 1%. 2014 is set to be only marginally better, with 1% value growth and negative volume growth. The interest of the Australian consumer in cheese appears to be waning.

COMPETITIVE LANDSCAPE

Fonterra Brands (Australia Pty Ltd) dropped from being the largest player in cheese in Australia, with predicted 25% value share, largely due to a decision by Coles, one of Australia’s two largest supermarket chains. Fonterra Brands owns Bega, the largest brand in cheese, as well as Perfect Italiano and Mainland. The presence of the latter has faded in recent years, with much of its range being delisted by Coles, in an attempt by the supermarket to support Australian manufacturers.

PROSPECTS

Lion Pty Ltd became the largest player in cheese in 2013, a position that it intends to develop further. It declared an intention to focus particularly on the premium end, no longer investing heavily in its mainstream brands such as Coon. Cheese, particularly premium varieties of cheese, offer high profit margins for manufacturers, particularly compared to drinking milk products where profit margins have been squeezed in recent years as a result of the price wars between Coles and Woolworths. Having lost the contract to supply Coles with private label milk, Lion especially focused its strategy on cheese. Such a move by the leading player will ensure an upwards shift in unit price in Australia, and ensure strong value growth. Those types of cheese in which Lion Pty Ltd has a strong presence, such as unpackaged hard cheese, are set to benefit from this focus on the premium end. Unpackaged hard cheese is set to hold 12% share of hard cheese’s value sales in Australia in 2014, with that figure expected to rise to 15% by 2019. The same trend is also occurring in soft cheese, already inherently a premium cheese option, but where consumers are now being increasingly lured by the deli section of the supermarket, to unpackaged soft cheese, which is outside of the scope of Euromonitor’s cheese definitions. The scope for buying unpackaged soft cheese is limited however, with Feta having been the most impacted. Popular gourmet cheese such as Brie and Camembert will continue to be sold on a virtually exclusively packaged format.